Moody's Ratings dropped the University of Arizona's ratings a notch ahead of a bond sale, citing weakening operating performance and liquidity.
The rating agency on Tuesday downgraded the university's
"Operating performance will be thinner and liquidity is likely to decrease through fiscal 2025 following weaker fiscal 2024 margins and unexpected use of liquidity stemming from inflation-driven expense increases and reporting delays," Moody's said in a statement. "While the university's governing Arizona Board of Regents (ABOR) and U of A are developing improved budgeting and reporting procedures, and implementing expense reductions, our view includes uncertainties around prospects for balanced budget recovery by fiscal 2026."
Other challenges include risk around the integration of University of Arizona Global Campus, Moody's added. The campus resulted from the university's purchase of Ashford University, an online, for-profit school with a troubled history.
The rating agency also noted the Tucson-based university's "excellent brand and strategic positioning as the state's land grant institution, with solid student growth and broad geographic appeal."
University of Arizona spokesman Mitch Zak said the university is taking action to eliminate its deficit in fiscal 2026, strengthen its $1 billion research enterprise and pursue innovative growth opportunities.
"While this rating reflects a point-in-time assessment, it was not unanticipated given our measured approach to achieving budget stability and recent uncertainties in research funding," he added in an email.
Moody's and S&P Global Ratings, which rates the university AA-minus,
Moody's assigned an Aa3 rating to $209 million of system revenue bonds the university plans to sell through ABOR. Zak said the debt is expected to price in early April.
The school last accessed the municipal market in October with
The university had $2.35 billion of outstanding bonds as of June 30, according to its
